ING Group (NYSE:ING) has agreed to sell its Russian operations to Global Development JSC, marking the Dutch bank's exit from the Russian market, the company announced today.
The deal involves the transfer of all shares of ING Bank (Eurasia) JSC, including its onshore activities and employees, to the Russian-owned company that specializes in factoring services.
The transaction, which has undergone thorough due diligence, is contingent upon regulatory approvals and is slated for completion in the third quarter of 2025. Global Development plans to rebrand and continue serving the existing customer base in Russia.
Since February 2022, ING has ceased initiating new business engagements with Russian companies and has significantly scaled back its operations.
Additionally, the bank has been working to segregate the Russian business from its global network and systems. These efforts have led to a reduction of ING's lending exposure to Russian clients by over 75%.
The financial impact of the sale on ING is expected to be negative, with a post-tax loss of approximately €0.7 billion. This figure includes an estimated book loss of €0.4 billion due to the sale price being lower than the book value of the business, which is anticipated to decrease ING's Common Equity Tier 1 (CET1) ratio by about 5 basis points.
Furthermore, there will be a negative impact of around €0.3 billion from the reclassification of the currency translation adjustment from equity to profit and loss. However, this reclassification will not affect the CET1 ratio.
Following the divestiture, ING plans to further diminish its offshore exposure to Russian clients, which as of September 30, 2024, stood at €1.0 billion, with half of that amount covered by export credit agencies or credit insurance.
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